Search Engines Less Free Than Before

Several search engines are consolidating or are developing premium fee sites. Northern Light has quit free service almost entirely and now does most of its work for big clients such as the CIA.

by InternetNews.com Staff [January 9, 2002]

In-Q-Tel, the Central Intelligence Agency's independent, non-profit company funded by the U.S. Government, is teaming with Northern Light Technology to develop an advanced search system that will eliminate the need to manually sift through countless documents in a variety of languages.

Financial terms were not disclosed.

The deal comes as Northern Light shifts its business model to focus on corporate and government client rather than individual Web searchers.

In the In-Q-Tel pact, a comprehensive, yet highly targeted, crawl of websites identified by classification experts will be used to create a database of all the relevant information while excluding sites deemed to be of little value to an organization's goals.

Users will access the search service via keyword or Boolean syntax, or a combination of search techniques. Northern Light's multiple-factor relevance ranking algorithm will be used to order the results and will be customized to meet specialized requirements.

"This new application of Northern Light's technology can deliver just the right information to our clients to save them from extensive and time-consuming searches typically done manually," said Gilam Louie, In-Q-Tel's CEO. "It is a dramatic increase in both efficiency and accuracy. Now users can quickly determine what's relevant and what's not. Northern Light is providing a valuable new application with tremendous potential to our governmental clients."

In-Q-Tel's principal objective is to identify and deliver information technologies to support the CIA's intelligence missions. It works with private and public companies in the U.S. and around the globe. It also partners with universities, established companies and labs. Founded in 1999, In-Q-Tel has offices in Northern Virginia and Menlo Park, Calif.

Northern Light's enterprise search products include the Northern Light Enterprise Search Engine, SinglePoint Custom Content Integration service, and licensing of the Special Collection, an online business research library of over 70 million pages of full text documents from over 7,100 business and news sources.

Northern Light is venture-backed by former Microsoft executive Gregory Whitten and others. It was named after a 19th century sailing ship, that at the time, boasted an advanced design.

The company is reacting to recent financial results. As of Jan. 16, the company will no longer offer free Web searches to the masses, focusing instead on large companies and government organizations. Another large customer is Boston financial services giant Fidelity Investments.

"Over the past year, Northern Light has seen booming demand for search, classification, taxonomy, and content solutions from our enterprise customers and marketing partners," said David Seuss, Northern Light's CEO. "Meanwhile, the business model for free, advertising-supported, public Web search has not been developing for us."

Seuss said sales bookings for the quarter ended in December doubled over the previous quarter, however the growth came from corporate customers. The company is privately held and does not release detailed financial information.

The shift is one that companies in several Internet sectors are making as ad dollars peter out. For example Alta Vista, owned by Andover, Mass., investor CMGI is selling its search technology to companies with large databases to manage.

Yahoo! is also accelerating the development of premium sites and services. It's done portal work for the indomitable fast-food behemoth McDonalds, but Yahoo! Inc. Wednesday inked an even greater deal with Philadelphia's CIGNA Corp. to offer the benefits provider's health care members and retirement plan participants personalized benefits websites.

In a multi-million-dollar and multi-year pact, for which financial details were not made public, Cigna and Yahoo! have cut a deal to give 16 million consumers more control over health and retirement plans. Starting this year, users will be able to tap into their packages online from work, home, on the road and through their My Yahoo! home page.

How will this help Cigna network members? As with most portals, users will have convenient access to the tools they need to choose a doctor, review claims or order prescriptions. They'll also be able to view daily updates of their retirement plan performance, move 401(k) funds between accounts, change contributions and model their financial goals, said CIGNA Chairman and CEO H. Edward Hanway.

While the agreement should certainly give members a reason to be happy, the employers of the consumers who sign up for the service will benefit from improved service and information accuracy, as well as simplified administration.

Cigna's website Cigna.com garners almost 15 million page views per month, making it the largest customer of Yahoo! Enterprise Solutions. Individualized websites will be generated through the use of personalization tools from Yahoo! The CIGNA online benefits offering, which is scheduled to begin rolling out in the first half of 2002, can be customized by employers and personalized for employees.

This service is expected to be available to CIGNA Retirement & Investment Services plan participants in 2002 and most of CIGNA HealthCare's 14.3 million members by the end of 2002.

Meanwhile Yahoo! is expanding internationally. Aiming to boost advertising revenue amid one of the industry's worst downturns in recent history, the company is snapping up troubled StarMedia's Brazil-based search engine, Cade?, with an eye to increasing its foothold in Latin America.

Financial terms of the sale were not disclosed. By purchasing the portal, Yahoo! gains one of the major online media players in the region. Cade?, which means "Where is?" in Portuguese, reaches about 2.1 million Web users monthly, according to Nielsen//NetRatings and Ibope figures.

In conjunction with Yahoo!'s own Brazilian subsidiary, the property will reach an expected 52 percent of the Brazilian Internet market, which is the largest in Latin America. About 45 percent of the region's 22 million users reside in Brazil, according to market researcher IDG.

As a result, Yahoo! would essentially command the third-largest Web property in Brazil by traffic. However, the company said that each site would appear relatively independent, retaining the original URLs but combining and sharing their directories of regional websites. Cade? also will include links to Yahoo!'s jobs, shopping, e-mail, and GeoCities home page hosting areas.

Yahoo! said it plans to standardize ad selling practices across both sites, under the administration of its Fusion Marketing group.

The move, Yahoo! said, would provide better targeting and larger audiences for advertisers looking to reach the Brazilian Internet population.

"This acquisition demonstrates our commitment to constantly improve on the user experience and our determination to be a long-term player in the Brazilian market," said Roberto Alonso, who is vice president and managing director for Yahoo! Latin America. "As we continue to build the Internet's leading global consumer and business services company, Yahoo! remains focused on delivering relevant, comprehensive content, programs and services to consumers, advertisers and customers around the world."

Yahoo!'s efforts to reach advertisers in Latin America come as a handful of major offline brands are looking to the area.

General Motors, for instance, last year struck a deal with Miami-based portal and ISP Universo Online to create sponsored areas and e-mail promotions targeting the Brazilian, Argentinean and Columbian populations. It was the first effort by GM to market internationally via Web media buys, and the automotive giant said it also planned to launch similar initiatives elsewhere in Latin America.

In May, StarMedia landed a heap of new financing from BellSouth and magazine publisher Primedia, both of which received company stock and sizable advertising and marketing opportunities on the company's Latin American sites.

Still, such efforts by major advertisers evidently couldn't help New York-based StarMedia, which has been hit hard by the downturn in the Internet economy, and lately, accounting woes.

Indeed, it would seem that the sale of Cade? to Yahoo! marks a significant about-face for the media player, which had aimed to focus on both the U.S. Hispanic/Latino population, and Portuguese- and Spanish- speakers in Latin America.

But executive say the move is in line with StarMedia's "evolution," according to the language used in the company's Securities and Exchange Commission filings on Tuesday, an evolution that doesn't include a search and Web directory.

"The sale of Cade? reflects StarMedia's focus on providing value to clients, primarily through a combination of direct response marketing programs, sponsorships, portal development services, and wireless technology and applications," said StarMedia president and chief executive Enrique Narciso.

According to the regulatory filing, Cade? "is not in line with this new strategy."

In addition to the troubled advertising market, StarMedia's "evolution" takes place as the firm prepares to restate earnings for all of 2000 and the first half of 2001. That's due to suspicions that two Mexican subsidiaries, Web directory AdNet and StarMedia Mexico, improperly recognized approximately $10 million in revenues. At the same time, the company also announced the resignation of its chief financial officer, and the firing of its general counsel.

Still, despite the current problems, Narciso remains optimistic with StarMedia's direction.

"We look forward to the opportunities ahead of us, and are confident in StarMedia's position in the marketplace offering integrated media and business solutions across multiple platforms that leverage the company's technology, content and audience."

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